The company posted a quarterly loss of 221 million reais ($97 million), its first results since combining assets with Portugal Telecom SGPS SA in April. The result was larger than the combined shortfall of 124 million reais the companies would have posted together a year ago, according to a securities filing.

Revenue in Brazil slipped 2 percent from a year earlier to 6.94 billion reais. Revenue from Portugal fell 3.4 percent in euros, but a currency swing boosted results in Brazilian reais by nearly 10 percent. As a result total revenue was little changed at 9.02 billion reais.

In a first-of-its-kind enforcement action in Brazil, the Justice Ministry recently fined the country’s largest telecommunications company Oi $1.6 million for invading the privacy of subscribers to its broadband Internet service by without consent tracking their Web usage and selling the information to behavioral advertisers.

Amaury Oliva, director of the Justice Ministry’s Department of Consumer Defense and Protection (DPDC), told Bloomberg BNA July 28 that the department began to investigate Oi in 2010 based on allegations it had partnered with Phorm Inc.—a U.K.-based online advertising company—to develop a program to monitor Internet activity.

Phorm was at the heart of investigations by U.K. and European Union officials regarding the use of Phorm tracking software in trials involving the U.K. telecommunications company BT.

New research on telecommunications services in Brazil revealed that only 40.8 percent of households have internet access, the main barrier being the price of computing devices and access services.

The numbers of the research System of Indicators of Social Perception (SIPS), undertaken by the Brazilian Institute of Applied Economic Research (Ipea) show that the remaining digitally excluded households do not have internet access due to not owning a computer (59.6 percent), not being able to afford access services (14.1 percent), not having the need for internet (8.7 percent) and not knowing how to use it (4.3 percent).

Brazil will drop a controversial provision that would have forced global Internet companies to store data on Brazilian users inside the country to shield them from U.S. spying, a government minister said on Tuesday.

The rule was added last year to proposed Internet governance legislation after revelations that the U.S. National Security Agency had spied on the digital communications of Brazilians, including those of their President Dilma Rousseff and the country’s biggest company Petroleo Brasileiro SA.

Instead, the legislation will say that companies such as Google Inc and Facebook Inc are subject to Brazilian laws in cases involving information on Brazilians even if the data is stored abroad, congressional relations minister Ideli Salvatti told reporters.

Brazil and the European Union agreed on Monday to lay an undersea communications cable from Lisbon to Fortaleza to reduce Brazil’s reliance on the United States after Washington spied on Brasilia.

At a summit in Brussels, Brazilian President Dilma Rousseff said the $185 million cable project was central to “guarantee the neutrality” of the Internet, signaling her desire to shield Brazil’s Internet traffic from U.S. surveillance.

“We have to respect privacy, human rights and the sovereignty of nations. We don’t want businesses to be spied upon,” Rousseff told a joint news conference with the presidents of the European Commission and the European Council.

Brazil’s state-run telecom company Telebras has said that a submarine cable for Internet transmissions between Latin America’s biggest country and Europe will be laid starting this year.

Spokesman Ronald Valladao yesterday said the company’s board authorised Telebras to sign an agreement with Spain’s IslaLink Submarine Cables to lay and operate the cable. He said the $185 million project is expected to begin operating in early 2016.

Telebras will have a 35 per cent stake in the Brazilian company that will be formed to operate the trans-Atlantic cable while IslaLink will have a 45 per cent stake and another Brazilian partner will have a 20 per cent stake, Valladao said.